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• Q4 2024 Revenue: $142.6 million, up 13.6% from Q4 2023.

• Full Year 2024 Revenue: $552.5 million, up 3.3% from 2023.

• Q4 2024 Gross Margin: 30.3% of revenues, compared to 30.8% in Q4 2023.

• Full Year 2024 Gross Margin: 29.4%, down from 29.6% in 2023.

• Q4 2024 Operating Income: $18.8 million, up 6.1% from Q4 2023.

• Full Year 2024 Operating Income: $73.6 million, up 2.5% from 2023.

• Q4 2024 Net Income: $11.5 million, down 0.5% from Q4 2023.

• Full Year 2024 Net Income: $45.7 million, down 5.7% from 2023.

• Cash and Cash Equivalents (Dec 31, 2024): $112.8 million, up from $106.7 million in 2023.

• Total Financial Debt (Dec 31, 2024): $59 million, down from $81 million in 2023.

• Cash Flow from Operating Activities (2024): $74.7 million, up from $69 million in 2023.

• Dividend Distribution: $32.07 per share, totaling approximately $16.1 million for the second half of 2024.

• 2025 Revenue Guidance: Expected between $593 million and $603 million, reflecting 7.3% to 9.1% growth.

• Warning! GuruFocus has detected 6 Warning Sign with MGIC.

Release Date: March 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Magic Software Enterprises Ltd (NASDAQ:MGIC) reported a 13.6% increase in revenue for the fourth quarter of 2024 compared to the same period in 2023, driven by strong demand for cloud and AI services.

• The company announced a strategic merger with Matrix IT, which is expected to create a global IT powerhouse with a combined market capitalization of $2.3 billion.

• The merger is anticipated to generate significant benefits through increased scale, operational synergies, and an expanded service portfolio, enhancing Magic's market position.

• Magic's cloud services revenue increased by 45% year over year, highlighting strong demand and successful execution in this segment.

• The company has a strong cash position with cash and cash equivalents amounting to $112.8 million as of December 31, 2024, up from $106.7 million the previous year.

Negative Points

• Magic Software Enterprises Ltd (NASDAQ:MGIC) will be delisted from Nasdaq following the merger with Matrix IT, limiting its trading to the Tel Aviv Stock Exchange.

• Non-GAAP net income for the fourth quarter decreased by 0.5% compared to the same period last year, indicating a slight decline in profitability.

• The company's gross margin slightly decreased from 30.8% in Q4 2023 to 30.3% in Q4 2024, reflecting pressure on profitability.

• Despite revenue growth, the North American market showed stagnation in revenue excluding acquisitions, indicating challenges in organic growth in this region.

• The merger process is expected to continue into the third quarter of the year, which may create uncertainty and require significant management focus and resources.